Cryptocurrency Market Enters Sharp Correction as Bitcoin Risks Harder Fall
Bitcoin and the broader cryptocurrency market entered into a sharp correction on Thursday, paving the way for more sustained losses in the very near term. The pullback isn’t entirely out of the ordinary given BTC’s rapid advance and subsequent struggle to overcome major barriers located at $8,000 and $8,300.
Bitcoin Price Pulls Back
All major cryptos recorded declines through the early part of Thursday’s session. Bitcoin reached a session low of $7,468.31 on Bitstamp before recovering around $7,569. The 24-hour BTC chart courtesy of CoinMarketCap show an average percentage drop of around 3%.
Bitcoin’s technical picture hasn’t changed very much based on the daily chart. The largest cryptocurrency remains in heavy accumulation, as evidenced by the A/D line. Buy-and-hold positions appear to have weakened somewhat, but the underlying trend remains overwhelmingly bullish in this regard.
Momentum has slowed significantly from the extreme overbought levels that we saw earlier in the month. Nevertheless, bitcoin’s daily relative strength index (RSI) is still holding above 60.
Bitcoin’s upward trajectory has slowed over the past week following more than a month of impressive gains. The cryptocurrency experienced a sudden flash crash last Friday after a mysterious whale liquidated 5,000 BTC on Bitstamp. This had a cascading effect on the broader market, sending altcoins and tokens tumbling. BTC and its altcoin peers quickly recovered, leading some to speculate that a more sustained rally was afoot. Although that hasn’t materialized, investor sentiment remains positive.
Traders interested in the short-term picture can expect more downward pressure on the BTC price after it failed to overcome the aforementioned resistance zones. This means a fall below $7,600 and eventually $7,200 is still in the cards. This view was recently shared by cryptocurrency analyst Alex Kruger, who laid out bitcoin’s support levels.
Support: 7600, 7200, 6800, 6400, 6200, 6000, 5750-5500, 5000.
Resistance: 8400-8500, 10000, 11500-11750, 13000, 15000, 17400, 20000, moon.
— Alex Krüger (@krugermacro) May 21, 2019
Crypto Markets Fall
Bitcoin’s altcoin peers were all down at least 2% through the early morning session. Ethereum (ETH) experienced a sharper correction, falling 6.2% to $237.01. Ether outperformed the broader market on Wednesday after protocol developers announced an ambitious roadmap for their next wave of technical upgrades. Read more: Ethereum (ETH) Showing Poise as Development Roadmap Points to Bright Future.
The value of XRP fell 5.2% to reach $0.3710. Bitcoin cash (BCH) was down 5.8% at $382.48. EOS dropped 5.75 to $5.85.
Further down the market-cap rankings, Cardano (ADA), Stellar (XLM) and Tron (TRX) were each down 6% or more.
As a result, the total value of cryptocurrencies reached $236.3 billion, some $30 billion lower from the yearly peak.
There was no immediate catalyst for the broad downtrend on Thursday, though technical re-positioning was likely a factor after coins failed to reach new highs during the latest run-up in prices.
Also read: Stellar Week for Bitcoin, Altcoins Ends in Ruin.
Altcoins and tokens have clawed back some market cap from bitcoin in recent weeks. Combined, they now account for 43% of the market’s allocated capital. At one point this month, altcoins/tokens were valued at less than 40% of the overall pie.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via TradingView and CoinMarketCap.